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Playland Products is considering producing toy action figures and sandbox toys. The products require different specialized machines, each costing $1 million. Each machine has a
Playland Products is considering producing toy action figures and sandbox toys. The products require different specialized machines, each costing $1 million. Each machine has a five-year life and zero residual value. The two products have different patterns of predicted net cash inflows. (Click the icon to view the data.) Calculate the sandbox toy project's ARR. If the sandbox toy project had a residual value of $175,000 would the ARR change? Explain and recalculate if necessary. Does this investment pass Playland's ARR screening rule? First, enter the formula, then compute the ARR of the sandbox toy project. (Enter amounts in dollars, not millions. Enter your answer as a percent rounded to two decimal places.) Accounting rate of return Average annual operating income from asset + Initial investment 1000000 = Playland Products is considering producing toy action figures and sandbox toys. The products require different specialized machines, each costing $1 million. Each machine has a five-year life and zero residual value. The two products have different patterns of predicted net cash inflows. (Click the icon to view the data.) Calculate the sandbox toy project's ARR. If the sandbox toy project had a residua - x Does this investment pass Playland's ARR screening rule? Data Table First, enter the formula, then compute the ARR of the sandbox toy project. (Enter {imal places.) Average annual operating Income from asset Initial investmed 1000000 ..... Annual Net Cash Inflows Toy action figure Sandbox toy Year project project Year 1 .........$ 321,225 $ 500,000 Year 2 321.225 340,000 Year 3 321.225 300,000 Year 4 321.225 280,000 321,225 Year 5 30,000 $ 1,606,125 $ Total 1,450,000 Playland will consider making capital investments only if the payback period of the project is less than 3.5 years and the ARR exceeds 8% Print Done
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